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Groba v. German American Farm Mutual Insurance Co.

Court of Appeals of Texas, First District

April 13, 2017

MARK GROBA, Appellant

         On Appeal from the 333rd District Court Harris County, Texas Trial Court Case No. 2009-16387

          Panel consists of Justices Jennings, Higley, and Massengale.



         This is an appeal from a take-nothing judgment in favor of German American Farm Mutual Insurance Company on Mark Groba's claims for breach of contract, violation of the Deceptive Trade Practices Act, and unfair insurance settlement practices. On appeal, Groba challenges the legal and factual sufficiency of the evidence to support the jury's verdict that German American did not violate the terms of an insurance policy by failing to pay for damage allegedly caused by Hurricane Ike.

         We affirm.


         Appellant Mark Groba owned a duplex in Galena Park, Texas, as an investment property. The duplex was insured by German American for a policy period from April 1, 2008 to April 1, 2009. The policy covered direct physical loss caused by storm, including lightning, windstorm, and hurricane. Hurricane Ike hit the Houston area in September 2008, and five days after the hurricane made landfall, Groba reported to German American that the duplex had sustained "roof and window damage."

         Donald Burklund, the in-house claims adjuster for German American, received Groba's claim and assigned it to Dana Holbrook, an independent claims adjuster. In addition to working as a claims adjuster, Holbrook had a background in construction, home repair, and contracting. Within one month of the hurricane, Holbrook inspected the duplex, took photographs, and prepared an estimate for repairing property damage. His estimate was based on his experience, observations, photographs, and an analysis performed with Powerclaim estimation software.

         Holbrook concluded that three items required repair due to windstorm damage: the roof, a soffit, and a window. He opined that replacement of the entire roof was not necessary. He estimated a cost of $325 to secure a loose section of the roof with a new fastener and to replace a small section of missing eave metal. He estimated a cost of $75 to secure a soffit that had become loose and a cost of $117 to replace and reglaze a window, which had sustained damage to two of its window panes. Although he observed peeling, discoloration, and warping of plywood siding, he did not estimate a replacement cost due to his determination that the damage was caused by age rather than hurricane damage.

         Holbrook's written estimate reflected the insured's deductible and recommended a payment of $464. The written estimate incorrectly listed an additional insured and incorrectly identified the street number of the duplex. Burklund struck through and corrected those errors. Holbrook also mistakenly calculated the deductible based on the replacement cost instead of the actual cash value, which is the replacement cost less depreciation. As such, Holbrook had deducted $53.00 instead of $51.70, resulting in an actual cash value payment to Groba of $464.00 instead of $465.30. Burklund corrected this error, crediting an additional $1.30, and within days he mailed a check to Groba.

         At trial, Groba testified that after the storm there was debris everywhere, and a fence was lying on the ground. He did not initially report to German American that a tree had fallen. When Groba later showed Holbrook the property, he said that a tree had broken a window pane and that the roof was damaged. Groba said that Holbrook measured the roof completely, took photographs, and spent "no more than 20 to 30 minutes" looking at the property. Believing that German American had underestimated the amount of damages attributable to Hurricane Ike, Groba did not cash the $465.30 check, and instead he filed this lawsuit. At trial, he sought approximately $27, 000 in damages, plus attorney's fees.

         In support of his damages estimate, Groba presented testimony from Daryl Quinney, a construction expert and investigator. Quinney visited the duplex twice at least six months after the hurricane. In conducting his investigation and making his estimate, he assumed that the damages he observed did not exist before Hurricane Ike, saying: "I was there to do a Hurricane Ike investigation so, therefore, my assumption is those damages resulted from the wind of Hurricane Ike." His estimate was based on his observations, photographs, and loss estimation software.

         At trial, Quinney testified that the roof sustained the following damage due to hurricane-force winds: (1) the roof panels lifted; (2) fasteners came off; and (3) flying debris struck and damaged roof panels, causing six dents in the bottom edge of the panels. He opined that the cause of the roof damage was "wind speed and uplift of Hurricane Ike." He also opined that the most cost-effective repair would be to fully replace the metal roof. He estimated that this would cost $12, 400.38. This included the cost to remove a shingle roof which was beneath the later-installed metal roof. Despite having found no water intrusion beneath the metal roof, he expected to find water intrusion that would warrant replacement of part of the roof decking, and he included the cost for that in his estimate as well. In addition, and without knowing if there was any moisture in the attic, he recommended treating the attic with a chemical to prevent the growth of mildew. Quinney also found exterior damages related to a cornice, painted plywood siding, and a damaged window that needed replacement. His total written estimate for repairs, which was admitted into evidence at trial, was $27, 934.25. But Quinney's written estimate was divided into five categories, each with a subtotal, and the sum of the five subtotals was $22, 815.71, not $27, 934.25:

Estimate Category
Mildew repellant attic space
$ 1, 909.76
Roof repairs
12, 400.38
Cornice and siding
3, 513.16
Contractor costs
4, 717.38
$22, 815.71

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